February 06, 2014
Credit: Dassault Aviation
India’s much-awaited purchase of 126 medium multi-role combat aircraft (MMRCA) for the Indian air force from French firm Dassault Aviation will be further delayed as negotiations to calculate the life-cycle cost haven’t been settled and there is no money for any new buys, Defense Minister A. K. Antony says.
“The MMRCA will materialize, [but] it will not be in this financial year [ending March 31],” Antony says. “The negotiations on life-cycle costs are continuing. I hope we will be able to close it [during the] next financial year.”
Here at the opening of India’s 8th DefExpo biennial exposition, Antony acknowledged that most of India’s procurement programs are stalled for the time being.
“We have already spent 92% of our capital budget for 2013-14 fiscal and there is no money this year for new projects. Major procurements are humanly possible only in [the] next financial year,” Antony says.
Antony played down speculation that India may opt for Russian Sukhoi fighters in light of the difficulties in closing the deal with Dassault. Disagreements between the parties on the life-cycle cost of the aircraft won’t affect the overall process, he adds. “We do not want any shortcuts in the procedures,” the minister says. Dassault Aviation bagged the multibillion-dollar deal in 2012.
The Contract Negotiations Committee (CNC) is still negotiating the cost of the program. CNC’s final report will be examined by the defense ministry, finance ministry, cabinet secretariat, and finally moved for approval by the Cabinet Committee on Security before it’s signed.
Defense Ministry officials fear that the cost of the entire program may have gone up following the rise in rupee-to-dollar rates, going from an initial estimate of $10.6 billion all the way up to $25 billion.